Experiential Supply & Demand

Like the swing of a pendulum, the travel economy is turning inside out for the 2nd time in 12 months. This time for the better from a market perspective, and high on the heels of a tumultuous year very busy with cancellations and re-books, plus new reservations, a tidal wave of guests is now coming for experiential and adventure travel destinations.

Ranches, lodges, and outfitting businesses are in high demand, and with greater than 90% of their lodging and guided trip inventory booked for 2021, nearly every operation is preparing to sell out all of the packages and trip offerings they have available to staff and support.

Some economists would say that 100% market saturation is an indication it is underpriced. The premise is that a hospitality business generally stands to earn more revenue when it books 80 to 90% of their supply at a higher price point than one that would produce a sell-out.  As a result, owners and operators are not asking if they will raise prices in 2022, but the question is by how much? The general buzz in the industry is people have money to spend, and the market will support increases of 10 to 20% (depending on the destination, availability, and the caliber of experience).

Another lesson learned from 2021, is experiential and adventure travel businesses which run an all-inclusive model are moving away from static and seasonal pricing and getting serious about revenue management. By taking a page from the corporate hospitality playbook, and employing a dynamic pricing approach, where rates yield with the rise and fall of occupancy, independent operators are generating more revenue and improving cash flow. While dynamic pricing is relatively new in the world of experiential and adventure travel, it is commonplace at hotels and resorts, and customers are very familiar with, and understanding of, why they might pay more or less depending on their dates of stay.

So the next time your top guide is also your last guide available, or the guest wants your best cabin at the best time of year, remember the customer understands that may come at a higher price, and business owners that can deliver on expectations and provide quality when it is needed most deserve to be paid for it.

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